Rupee rally continues for 6th day, up 5 paise to 66.21

Recovery in the equity market also boosted the rupee value against the dollar, a forex dealer said

Extending its winning momentum for the sixth straight sessions, the rupee today strengthened by 5 paise to close at 66.21 per dollar on persistent selling of the American currency by banks and exporters amid sustained foreign capital inflows.

Recovery in the equity market also boosted the rupee value against the dollar, a forex dealer said.

The rupee resumed lower at 66.30 against last Thursday's closing of 66.26 at the Interbank Foreign Exchange (Forex) market and dropped to 66.3775 on initial dollar demand from banks and importers.

However, it recovered afterwards to 66.10 on selling of dollar by banks and exporters on hopes of more foreign capital inflows before finishing at 66.21, showing a gain of five paise or 0.08 per cent.

It has gained by 50 paise or 0.75 per cent in six trading days.

It hovered in a range of 66.3775 and 66.10 during the day.

The dollar index was up 0.11 per cent against a basket of six currencies in the late afternoon trade.

In overseas market, the dollar was on the defensive early, nursing deep losses against the euro and yen after Friday's firm US jobs report failed to shift a broadly held view that the Federal Reserve will remain cautious on raising interest rates this year.

Oil prices fell in early trading as the chances of Middle East producers agreeing to curb over-production appeared to fade, while US output remains stubbornly high.

Pramit Brahmbhatt of Veracity Financial Services said, "The rupee opened at 66.30/USD weaker compared to previous close of 66.26/USD thus by appreciating dollar. Following to positive cues from domestic equity market, the rupee appreciated and breached the level of 66.20/USD for the day."

The benchmark index Nifty closed with a gain of 46 points ahead of RBI monetary policy.

Trading range for the spot USD/INR paid is expected to be within 65.80 to 66.50/USD.

In forward market, premium for dollar moved down on good receivings from exporters.

The benchmark six-month premium for September declined to 206.5-208 paise from 210-212 on last Thursday and far forward March 2017 contract also fell to 403.5-404.5 paise from 407-409 paise.

The RBI fixed the reference rate for the dollar at 66.2430 and euro at 75.3713.

In cross-currency trades, the rupee firmed up further against the pound sterling to finish at 94.36 from 95.50 on last Thursday and also moved up against the euro to 75.26 per euro from 75.40.

However, the rupee dropped against the yen to 59.28 per 100 yen from 59.02 previously.

Image: A Kashmiri woman walks under a garland made of rupee notes on display at a market in Srinagar. Photograph: Fayaz Kabli/Reuters